McMaster Innovation Park Rendering
Alley, the stretch of University Avenue dominated by leading hospitals and related health services. “We definitely have room for a downtown Toronto asset to come to market and absorb the pent-up demand for lab space.”
accommodate this growth, knowing once they do the tenants will certainly come. Nelson says that he, like Lacey and Kenemy, has had to help landlords understand that life sciences real estate doesn’t work like other property types.
Lacey has also been in talks with U.S.-based shared lab space providers – think WeWork for the life sciences industry – who are interested in coming to Toronto to operate a facility. “They’re ready to sign a 25,000 sq. ft. lease downtown. I just have to show them the asset that’s ready to do it,” Lacey says.
It costs a great deal to build out a lab space and the tenants don’t often have stellar covenants, meaning there’s likely to be some turnover. However, the eventual payoff can be substantial if owners are patient. “It’s such a landlords’ market right now,” says Nelson. “There’s a 50% premium on rents if it’s biotech space. While there’s a pandemic imperative at the moment, there’s also an economic benefit to those who contemplate and execute a specialized life sciences development.”
“Opportunity is knocking. Will Toronto answer the call?”
‘AT CAPACITY’ Vancouver-based AbCellera Biologics Inc. made headlines last December when it was announced that the biotech firm was working with U.S. drug titan Eli Lilly & Co. on the same type of medicine that was given to Former U.S. President Donald Trump to treat COVID-19, a monoclonal antibody treatment. CBRE’s Kevin Nelson, who leads the Life Sciences Team in Vancouver, says news like that has helped spur renewed interest in the biotech sector. But at the moment there’s little he can offer clients by way of available lab space. AbCellera will be building two buildings in Vancouver, between the new St. Paul’s Hospital development and Vancouver General Hospital, to fulfill its own requirements. Otherwise, Nelson says, the state of the Vancouver life sciences market is at-capacity. “There’s tons of demand and no supply.” The sector is one of B.C.’s fastest-growing, with employment increasing by 5.6% between 2017 and 2018, to 17,300 jobs. What’s needed is for a developer to step up and build facilities to
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“But recognize the profile of your tenant,” he cautions. “You can’t look at it conventionally, like requiring a balance sheet showing $200 million in profit. It just doesn’t work that way with biotech. There are eight pharmaceutical companies in North America that are profitable, and that’s it. So the tolerance for risk has to be higher. “If you’re a landlord there are riches to be had here,” adds Nelson. “But life sciences is not for the faint of heart.” After all that we’ve been through over the past year, here’s hoping we’re all brave enough to lay the groundwork for a bustling life sciences sector that can help us improve health outcomes during and long after the pandemic.
Kevin Nelson, Vancouver
CBRE ADVANTAGE MAGAZINE